The August 7, 2017 edition of the New York Magazine blog states “Bill de Blasio is asking one-percenters to save the subways.” It’s well known that if you see a motorcycle club member wearing a patch that says 1%, you should certainly walk the other way as this is a reference to the statement often made that 99% of all motorcycle club members and riders are law abiding citizens.
We all know I’m not referring to motorcycle gangs, but once again, New York City is going to the well of one-percenters to resolve its woes. Just this year, the so called “millionaires tax” which was set to expire, was extended through the end of 2020 leaving New Yorkers with a top rate (not including the almost 4% New York City resident tax) of 8.82%. The latest proposal seeks to place an additional burden on single taxpayers earning more than $500,000 and couples making over $1 million, by raising the top City rate to 4.4%
The debate among economists has been going on forever as to whether higher tax rates make New Yorkers flee to greener pastures with lower or no state tax. I’m no economist, but I’m certainly in the trenches every day and in a good position to comment on what I observe on a daily basis. Clients and non-clients alike are constantly asking for advice on what they need to do to abandon their New York State and City (tax) homes.
Many are truly sad to leave. But once you “run the numbers” for them, the combined State and City rates of almost 13% and the savings they achieve by leaving this rate behind, is enough to cheer up even the most die-hard New Yorker.
One New York resident married couple particularly comes to mind. The couple was sitting on a large capital gain that would be recognized in the next few years. Nothing wrong with a little tax planning to save a few dollars. One spouse was reluctant, but when we computed the savings and realized the kind of home they could purchase in their new locale, the deal was done. Needless to say, after six months in the new location both partners were overjoyed. I even received a big hug from one even before we successfully completed the residency audit with a no change.
Well, Mayor de Blasio, even if more taxes won’t drive out the one-percenters, let’s not forget the basic concept of no taxation without representation. How many one-percenters really take the subway? They are too busy enjoying their motorcycles.
If you have concerns and questions about your tax position, I can be reached at WBerkowitz@BerdonLLP.com or contact your Berdon advisor.
Wayne Berkowitz, a tax partner and head of the State and Local Tax Group at Berdon LLP, advises on the unique requirements of governments and municipalities across the nation.